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Stock market confusion reigns supreme in muted Tuesday trading action

Written By | Jan 7, 2020
stock market confusion

Confusion. Image by Gerd Altmann from Pixabay. Public domain, CC license 0.0.

WASHINGTON – In yesterday’s column, I duly noted the market’s negative tone. But I also admitted that I never know how stocks are going to end up at the 4 p.m. ET closing bell anymore, either. And, sure enough, markets closed nicely up, countering Monday’s almost daylong downward trend. As stocks try to replicate that successful pattern today, however, the still-muted trading action Tuesday at the 1:30 p.m. ET mark shows that continued US stock market confusion reigns supreme.

Continuing stock market confusion: A Trump-addled muddle

It is a Trump-addled muddle out there, news wise. And as I’ve noted ad nauseam, it’s news in recent years that gives Mr Market his varying moods. Less and less day-to-day action depends on PE ratios, actually earnings and actual dividends. Nor does it have much to do with charts, at least on a daily basis. So our holdings remain, to some extent, hostage to whatever true or fake news is going viral at almost any time of each trading day. And I think it’s fair to say that this defines the current, ongoing bout of stock market confusion.

Dominating the news Tuesday are the recent usual suspects. The Trump administration’s antiseptic elimination of Iran’s chief hit man immediately caused leftist Democrats, fellow travelers, MSM lackeys, Hollywood cretins and numerous assorted doofuses to get their collective knickers in a knot.

It was Trump’s fault, of course that Americans and allies have been offed in considerable quantities even before Benghazi became a symbol of the Obama administrations’ – and Hillary Clinton’s – consistently dumb-ass foreign policy. But leave it to Trump to whack the mastermind of all this death. Then watch all these clowns mourn the people’s hero, Soleimani, and trash Trump for doing the right thing.

The ripple effect of this alone leaves traders and investors completely confused as to where they should go next in the stock market. Or whether they should just dump everything they own and stuff all those dollars into a convenient mattress until the smoke clears.

Will they, or won’t they? The ayatollahs and their thugocrat pals need to decide

Likely, the desperate Iranian regime will do something nasty to show they’re not afraid of Trump. (Although they are.) The media and their Democrat bosses will pile on to blame the president. And once again, they’ll have another bogus anti-Trump argument to put before the voters this fall.

Wall Street fears this, too. As I’ve said many times before, they hate Trump but they generally love his economic policies. But this wimp class of traders and / or investors is going to have to fish or cut bait in the election booth this fall. Will they really vote against their own economic interests? A goodly number of them will. No hugging, no learning for these people. It’s like a Seinfeld episode writ large.

Oh, Soleimani…

Here’s CNBC, meditating on the same topic and drawing an interesting analogy to another Middle East incident, lest we forget.

‘”Investors starting on Monday began to downplay the importance of Soleimani and that sentiment carried over to int’l markets on Tuesday,’ said Adam Crisafulli, founder of Vital Knowledge, in a note. ‘Investors aren’t oblivious to rising Middle Eastern tensions, but they’re placing Soleimani in the same category as the recent Iranian strikes against Saudi oil assets (a risk, but not only immediately fatal to the present equity narrative).'”

On the other hand, Trump’s USMCA, absurdly delayed by the mass-insanity of the Democrat-led House, has finally arrived in the traditionally slowpoke Senate. And it’s just passed its first critical hurdle as Fox Business notes.

“The U.S.-Mexico-Canada Agreement moved closer to a final vote in the Senate, with the Senate Finance Committee advancing the legislation Tuesday in a 25-3 vote….

“Republicans Pat Toomey of Pennsylvania and Bill Cassidy of Louisiana, with Democrat Sheldon Whitehouse of Rhode Island, voted against the updated North American trade deal…

“‘This modernized trilateral trade agreement will open new markets for American exporters, create hundreds of thousands of new jobs, grow the national economy and protect U.S. workers,’ Sen. Chuck Grassley, R-Iowa, said in a statement.”

Re: Those two Republican senators who voted “Nay.” You can always count on a few GOP pols to act like Democrats in a vote like this. As for that inaptly named Rhode Island Democrat, Sheldon Whitehouse, his blatant jackassery is well known on the Hill.

But not to worry. The agreement moves on after this decisive committee vote. But stock market confusion on its final passage still reigns supreme.

Remember the USMCA?

But wait! There is one remaining problem in getting this bill passed, signed and put into force. We now need an up-or-down vote for USMCA in the full Senate. But, but, but…

“The timing of a vote in the full Senate is uncertain, however. Majority Leader Mitch McConnell has said a vote will come after an impeachment trial, but House Speaker Nancy Pelosi has not yet sent the two articles of impeachment to the Senate.”

Figures. Makes you wonder once again: What the hell are we paying these clowns for? The constant delays in getting this legislation passed have been causing economic problems in some sectors for over a year now as Congress dilly-dallies on USMCA. At least some of these anti-American clowns in the House need to lose their jobs this November. Even if you always vote Democrat. Because with the delay of USMCA, you’re certainly not getting your money’s worth for your vote.

The China Syndrome returns

Beside the Democrats’ impeachment kabuki and the Middle East and related WW III-mongering, the third iffy thing bothering traders and investors is, you guessed it, the China Syndrome, specifically as it manifests in the yet-to-be-signed Phase I trade deal. It’s supposed to be signed here in D.C. on January 15. I think. But I’m now reading about nasty rumors and innuendoes that China is waffling again on specific trade targets, re: buying American agricultural products. I still rate this agreement signing as a tossup. And I think a great many traders and investors are in the same boat. And this is also something that’s screwing up the markets this month.

But it looks like at least this one gets resolved, one way or the other, on January 15. Meanwhile, spooked traders and investors alike are making the market weird again today by exiting various stocks without leaving virtual footprints. Even though they are, as we can see in this month’s yo-yo-ing market averages.

In our final note today, we again are regaled with tales indicating just how much money the legal marijuana patch is raking in. Except that, as of this minute at least, it’s not. Check out this headline on Fox, which is running with an AP storyon the topic. The headline:

State legalizes weed, sells out of $10M worth almost immediately

And now, the gist of the story.

“Several Illinois recreational marijuana dispensaries were closed Monday, with some owners saying strong demand has caused a shortage in supplies and staff exhaustion.

“The legal sale of recreational cannabis began Jan. 1 in Illinois, with customers spending about $3.2 million on the first day and more than $10.8 million over five days. By comparison, Michigan, which made recreational marijuana legal on Dec. 1, generated $3.1 million in the first two weeks of sales.”

That’s all nice and everything. But the top, conservatively constructed marijuana industry ETF, aka the ETFMG Alternative Harvest ETF (trading symbol: MJ. Get it?), continues to wallow at the bottom of its range. Because most of the companies included in the ETF continue to struggle with profitability, since increasing legal recreational marijuana sales are currently not even close to expectations.

Maybe Maryjane fans are growing their own. Or maybe the average American still prefers Johnny Walker Black. This weird industry should take off at least moderately at some point in time. “When?” is the current big question, however.

MJ does pay well over a 5 % dividend now, given last year’s huge price declines in these shares. But the dividend comes in irregularly, and is largely due to the inclusion of Big Tobacco stocks in the ETF’s portfolio. (Due, of course, to the simple fact that this dying industry is looking into marijuana investing and production to revive declining bottom lines.

I’ve lost money on MJ at least twice, though not much. At these prices (as low as $16.24 per share Tuesday), maybe I’ll take another chance. A little one.

On the other hand, staying fully invested these days seems like an even bigger risk, given the topics we’ve rambled through above. At least as long as this month’s bizarre case of utter stock market confusion remains a constant in investors’ minds.

– Headline image: Confused about whether to invest or not? So am I. Image by Gerd Altmann from Pixabay. Public domain, CC license 0.0.


Terry Ponick

Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17